Shareholders call for Black to return 'excessive pay'

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The Independent Online

Shareholders are demanding that Lord Black of Crossharbour and other directors at Hollinger International return more than $200m (£117m) to the company, in addition to millions of dollars they have already committed to giving back.

After paying off debts, Lord Black, who is reputed to be a billionaire, could be left with just a few million dollars from Hollinger, before any lawsuits are launched by shareholders and any fines that may be imposed on him by financial regulators in the US and Canada. Lord Black and his wife, Barbara Amiel, the Telegraph columnist, enjoy a lifestyle that she has said is extravagant "beyond limits".

Lord Black and three other directors of Hollinger, which owns The Daily Telegraph and its sister Sunday title, committed themselves this week to giving back $32m to the company. These "non-compete" fees had been paid to them personally, after deals done by Hollinger as a company but, on Monday, Lord Black admitted that the board of Hollinger never approved these payments.

Shareholders in Hollinger have said they now want Lord Black and the others to return to the company an additional $75m in non-compete fees they received, which were approved by the Hollinger board, and some $130m in management fees that they claim were "excessive" pay awarded to the company's directors in the past few years.

Under arrangements at Hollinger, when the company sold newspapers to other companies, the buyers paid individual directors to agree not to start new papers in the same markets. Independent shareholders say these non-compete fees should have gone to Hollinger itself.

In addition, Hollinger did not pay its directors a salary but paid "management fees" to another company called Ravelston, a private business controlled by Lord Black and other Hollinger directors.

Tweedy Browne, the leading independent Hollinger shareholder, has questioned the $203m paid to Hollinger directors in management fees between 1995 and 2002. It suggested that a maximum of $10m a year, a total of $70m, would be reasonable to have been paid to managers of a business the size of Hollinger. Tweedy Browne believes that all the money for non-compete agreements should have gone to Hollinger, not its directors personally.

Lord Black is thought to own 65 per cent of Ravelston, which would have to pay back most of the contested fees, implying that he would personally have to come up with more than $100m.

Chris Browne, managing director of Tweedy Browne, said he expected the special committee of Hollinger's non-executive directors, which is investigating how the company has been run, to demand that the excessive management fees be repaid, along with all the non-compete cash.

He said: "If the special committee concludes that all these payments were justified then we'll go to the courts ... Conrad Black may live like a billionaire but anyone who thinks he's a billionaire hasn't done their maths."

Eugene Fox, managing director of Cardinal Capital, another shareholder, said: "There are serious matters that remain to be resolved."

Although it is estimated that a sale of Hollinger, which now looks likely, could fetch as much as $2bn, after paying off debts, Lord Black's personal stake in the holding company would only entitle him to an estimated $125m. That leaves him $25m from Hollinger, if he settled the latest shareholder claims, before any lawsuits or penalties with which he may now be hit.